Nifty ends tad above 8100, Sensex flat; IT slips, SBI up 3%

14 June 2016

3:30 pm Market closing: The market has ended flat with the Sensex down 1.06 points at 26395.71. The Nifty slipped 1.75 points at 8108.85. About 1521 shares have advanced, 1086 shares declined, and 139 shares are unchanged.

SBI, Cipla, Adani Ports, Sun Pharma and ITC were top gainers while Bajaj Auto, HUL, Asian Paints, Hero MotoCorp and Maruti were losers in the Sensex.

3:10 pm Gold climbs: Powered by a firm global trend and persistent buying by jewellers at the domestic spot market, gold prices climbed for the sixth straight day today, gaining Rs 140 to Rs 29,800 per ten grams at the bullion market today.

Silver also rebounded by Rs 260 to Rs 41,260 per kg due to increased offtake by industrial units and coin makers.

Analysts said a firming global trend where gold climbed to the highest in four weeks as uncertainty mounts over whether Britain will exit the European Union and speculations that the US Fed will keep interest rates unchanged at its two-day meeting that begins later in the day buoyed sentiment here.

2:40 pm FM on GST: Finance Minister Arun Jaitley today held a meeting with state finance ministers to iron out differences on the goods and services tax (GST), saying that consensus had been reached on a number of issues bogging down the tax, such as whether the rate should be capped in the Constitution.

A decade in the making, the GST will subsume almost all central and state-level indirect taxes and levies, and is expected to result in lower taxes, eliminate cascading taxes (tax on tax), improve compliance and widen the tax base.

"The idea of the meeting was to lay down further roadmap with respect to how to proceed with the GST. 22 state finance ministers attended the meeting and there were representatives from all states and union territories," Union Finance Minister Arun Jaitley said at a press conference following the meeting.

2:20 pm Oil update: Crude oil futures fell in Asian trade, as investors ignored signs of market tightness to focus on concerns over global growth and overnight declines in stocks on the impending vote on Britain's possible European Union exit.

1:45 pm Macro: The wholesale price index (WPI) for May came in at 0.79 percent year-on-year, compared to 0.34 percent in April, showing the second straight month where signs of industrial inflation have emerged, following 15 months of declining prices. Data released by the government today showed the WPI rising, helped by strength in all the three broad groups it covers (primary articles: up 4.55 percent year-on-year, 2.41 percent month-on-month), fuel and power (down 6.14 percent YoY, up 2.79 percent YoY) and manufactured products (up 0.91 percent YoY and 0.45 percent MoM). Manufactured products form a bulk (65 percent) of the WPI index's weightage followed by primary articles (20 percent) and fuel and power (15 percent).

1:30 pm Buzzing: Shares of Indraprastha Gas touched record high of Rs 614.90, up 5.8 percent ahead of launch of Mahanagar Gas' initial public offer. State-run GAIL also gained nearly 2 percent intraday Tuesday. The rally in both stocks is on the back of valuation that is likely to get by Mahanagar Gas through its IPO. According to grey market, the IPO price is likely to be at around Rs 485 and additionally there is a premium of over Rs 100. Mahanagar Gas' PE at 19 times is at a premium to Indraprastha Gas. Accordingly, the market capitalisation is expected to be around Rs 4,800-4,900 crore at Rs 485 apiece. FY15 diluted earnings per share can be at Rs 30.54 and price-to-earnings at 16 times.

The market is still under pressure as the Nifty hovers around 8100. The 50-share index is down 14.85 points or 0.2 percent at 8095.75 and the Sensex is down 34.66 points or 0.1 percent at 26362.11. About 1536 shares have advanced, 835 shares declined, and 133 shares are unchanged.

Gold fell Rs 56 to Rs 30,568 per 10 grams in futures trade today as participants reduced their positions, largely in line with a weak trend overseas. Moreover, profit-booking at existing level also weighed on gold futures.

Analysts said besides a weak trend in the overseas markets, profit-booking by speculators at current levels, weighed on the precious metal in futures trade here.

12:45 pm Europe opens: European stocks opened lower as investors waver ahead of a two-day meeting of the US Federal Reserve and global concerns over a Brexit weigh on sentiment.

The pan-European STOXX 600 was down 0.89 percent.

Global markets are shaky ahead of two crucial monetary policy decisions this week. On Tuesday, the US Federal Open Market Committee (FOMC) begins a two-day meeting. Expectations are for the bank to stand pat on interest rates following gloomy jobs data and rising concerns over the possibility of a Brexit.

12:35 pm Interview: Magma Fincorp which caters to financing in tractors, used vehicles, mortgages and SME sector expects a good monsoon to lower its non-performing loans.

In an interview to CNBC-TV18, Atul Bansal, CFO, Magma Fincorp, said that he expects the company's disburments to grow 35-40 percent over FY16 and loan book to grow 12-15 percent over FY16 on account of traction in tractors and SME segments.

On the company's stressed NPA levels, Bansal said NPAs are a reflection of its portfolio and underlying economy. Monsoon and crop failures in rural India and subdues goervnment spending saw our NPAs rising.

12:20 pm Interview: Sugar prices have been on a tear globally as well as India but they have more room to go up further, says Narendra Murkumbi, VC and MD, Shree Renuka Sugars .

In an interview with CNBC-TV18, Murkumbi said sugar's global rally had been driven by weather problems as well as hot money flowing into the market, but he said a "structural deficit" was on the anvil.

"There has been a reduction of capacity in Brazil. Current valuations across the world are much lower than the replacement cost," he said.

Domestically, he expects the price to be firmer than Rs 33-34/kg, and sugar production of 23 million tonnes in next sugar year starting October 1, 2016.

12:00 pm Market Check: The market remained rangebound in afternoon trade with the Nifty hovering around 8100 ahead of Federal Reserve's two-day meeting that will start tonight.

The Sensex fell 26.72 points to 26370.05 and the Nifty declined 9.70 points to 8100.90 while the broader markets continued to outperform.

11:45 am RBI's norm on debt restructure: The Reserve Bank of India on Tuesday announced a new scheme to restructure corporate debt which will benefit companies with unsustainable debt. Varinder Bansal of CNBC-TV18 analyses a few companies that may get the stick on account of poor interest coverage ratios.

The framework, termed Scheme for Sustainable Structuring of Stressed Assets, envisages determination of the sustainable debt level for a stressed borrower, and bifurcation of the outstanding debt into sustainable debt and equity/quasi-equity instruments which are expected to provide upside to the lenders when the borrower turns around.

Thus, a bank can split the 'sustainable' and 'unsustainable' debt portions of a firm, making provisions for each separately, and converting the sustainable levels of debt into equity or quasi equity instruments. However, the sustainable proportion of debt must not be less than half the loans of a company.

11:30 am Piping hot: Assam tea prices have hit a record price of Rs 501 per KG. This trend, says Kamal Baheti, Chief Financial Officer (CFO), McLeod Russel , will continue into the peak productions months (between July and October). This will lead to a rise in margins to 13-14 percent in FY17 as against 8.6 percent in the previous year.

The tea companies have seen their costs rise over the last two years. This increase in costs is led by hikes in wages, says Baheti.

CS Bedi, Managing Director, Rossell India , agrees with Baheti, but also adds that increasing tea prices will give some relief to tea companies. He expects tea prices to go up by 10 percent in FY17.

The market is flat as investor are on edge ahead of two-day Federal Open Market Committee starting tonight. Analysts are not expecting any change in rates but but the central bank may tweak its view on the economy or make changes to its interest rate forecast, when it releases its statement and economic forecasts.

The Sensex is down 22.05 points at 26374.72, and the Nifty is down 9.80 points at 8100.80. About 1421 shares have advanced, 638 shares declined, and 97 shares are unchanged.

Adani Ports, SBI, Tata Motors, GAIL and Cipla are top gainers while HDFC, Bajaj Auto, Infosys, TCS and Asian Paints are losers in the Sensex. IT stocks are under pressure.

Oil prices fell more than onepercent in Asia, extending a sell-off on speculation about a pick-up in production while world markets are rattled by fears over Britain's possible exit from the European Union.

After a rally in the commodity that saw the US benchmark hit an 11-month high last week, investors are beginning to cash in and search out safe havens such as the yen and gold. Equities markets around the world have been tumbling since late last week on worries about the global economy and central banks' ability to provide support.

After a weak 3-year EPS delivery, earnings per share estimates increased by around 6/9 percent to 39/31 percent for FY17/18, says the brokerage which believes STFC is at an inflexion point as internal as well as external enablers should drive in EPS growth.

BoAML has been betting on both internal and external enablers that are in place to drive in growth.

10:20 am Market Outlook: Gautam Shah of JM Financial says for the short term, the level of 8,130-8,140 is important and in an optimistic scenario the pullback could end here.

However, keeping in mind that US VIX jumped substantially late last week and since the market has important events to look forward to, a deeper pullback down close to 8,000 is also possible in the current scheme of things, he adds.

Post this pullback, the index should be on course to take out 8,300 and move towards 8,650, Shah feels.

10:00 am Market CheckEquity benchmarks consolidate after correction in previous three days but the broader markets outperformed with the BSE Midcap and Smallcap indices rising 0.3-0.7 percent.

The Sensex fell 4.01 points to 26392.76 and the Nifty declined 4.20 points to 8106.40. The market breadth was positive as about 1235 shares advanced against 573 declining shares on Bombay Stock Exchange.

9:55 am Brexit woes: With latest Brexit polls in the UK pointing to an unexpected lead for the 'leave' camp, ahead of next week's crucial British referendum that will decide its fate in the European Union, currencies have started to wobble.

In an interview with CNBC-TV18, Paul Mackel of HSBC said the impact of the polls has started showing up on currencies, including on percieved 'safe havens' like the US dollar or yen.

HSBC has previously put out a note saying were the Britain to leave the EU, the sterling could see a "disorderly" fall of about 15-20 percent.

9:45 am Buzzing: Shares of Balaji Telefilms rallied over 9 percent as its much-controversial film is set to release on its scheduled date. The Bombay High Court has cleared release of Balalji's Udta Punjab with just one cut.

The movie, slated for release on June 17, will be screened with an 'A' certificate.

Passing the landmark order, a Division Bench comprising Justices SC Dharmadhikari and Shalini Phansalkar, directed the CBFC (Central Board of Film Certification) to certify the movie within 48 hours and asked the production house to modify the disclaimer. The movie is largely based on a cardinal issue, drugs, in the Punjab.

9:35 am Market slips: Unable to hold its early gains, the market has started to slip quickly. The Sensex is down 26.56 points or 0.1 percent at 26370.21, and the Nifty down 9.85 points or 0.1 percent at 8100.75. About 1007 shares have advanced, 419 shares declined, and 58 shares are unchanged.

Adani Ports, GAIL, SBI, Tata Motors and ICICI Bank are top gainers while HDFC, Bharti, Bajaj Auto, NTPC and Hero are losers in the Sensex.

After severe cuts yesterday, the market has opened in green on Tuesday. The Sensex is up 64.66 points or 0.2 perceny at 26461.43, and the Nifty is up 21.95 points or 0.3 percent at 8132.55. About 342 shares have advanced, 111 shares declined, and 24 shares are unchanged.

GAIL, ICICI Bank, SBI, ONGC and Axis Bank are top gainers while Bharti, Maruti and TCS are losers in the Sensex.

The Indian rupee opened lower by 6 paise at 67.19 per dollar on Tuesday versus previous close of 67.13.

Ashutosh Raina of HDFC Bank said, "The risk-off sentiment is quite evident owing to the uncertainty about Brexit referendum. Also, the June FOMC meeting, starting today, is expected to keep policy rates unchanged, but the markets will be looking for cues about the timing of hikes."

The safe-haven yen held firm after hitting a three-year peak against the euro and sterling and a six-week high versus the dollar yesterday on concerns Britain could vote to leave the European Union in a referendum two weeks from now. The pound resumed losses as new polls indicated support for the UK leaving the European Union.

Cues to watch out will be the two-day US Fed meeting that begins today. Analysts are not expecting any action from the Federal Open Market Committee, but the central bank could tweak its view on the economy or make changes to its interest rate forecast, when it releases its statement and economic forecasts.

Weak macro data may also hurt market today as retail inflation rose to nearly two-year high of 5.76 percent in May mainly due to rising prices of food items, including vegetables. This may hold back the RBI from reducing rates in the near term. The Consumer Price Index (CPI) based retail inflation, which measures the rate of price change annually, in April was at 5.47 percent. In May 2015, retail inflation stood at 5.01 per cent. In August 2014, consumer inflation was at 7.8 percent.

In global markets, Asia markets fell again, extending Monday's losses, following a lower finish in US stocks as investors looked ahead to central bank meetings in the US and Japan. In Japan, the Nikkei 225 wavered between positive and negative territory before trading down 0.17 percent, after tumbling 3.51 percent on the back of a relatively stronger yen on Monday.

The Dow Jones industrial average closed down 132.86 points, or 0.74 percent, at 17,732.48; the S&P 500 was down 17.01 points, or 0.81 percent, at 2,079.06. The Nasdaq composite finished down 46.11 points, or 0.94 percent, at 4,848.44.

Gold has hit a 4-week high as driven by rising investor risk aversion. Crude prices continued to decline as gloomy economic prospects in Europe and Asia weigh.